TITLE:
An Empirical Examination of the Impact of Banks on Economic Growth in Sierra Leone (2001-2017)
AUTHORS:
Ezekiel K. Duramany-Lakkoh, Mohamed Sajor Jalloh, Abubakarr Jalloh
KEYWORDS:
Bank Impacts, Economy and Banks, Banking Sector
JOURNAL NAME:
Journal of Financial Risk Management,
Vol.11 No.2,
April
25,
2022
ABSTRACT: Banking sector development is considered as an
essential driver of economic growth. Thus, this study examines the impact of the banking sector on the economic growth of Sierra Leone using indicators
like bank liquidity reserve to bank asset ratio, domestic credit to private
sectors, interest rate spread, gross domestic savings and deposit interest rate, and gross domestic product using yearly data from the period of 2001 to
2017. An empirical model was carried out using ordinary least square regression. From the outcomes of the
regression, analysis, and results, GDP is
strongly influenced by some of the banking indicators especially domestic
credit to the private sector. It is seen that domestic credit to the private sector has a positive and significant impact on GDP, while
deposit on interest rate has a positive but insignificant impact on GDP. The other indicators such as bank liquidity reserve, interest rate
spread, and gross domestic savings neither have positive nor significant to GDP.
Domestic credit to the private sector tends to have
a positive impact.